Indonesia’s ban on exports of nickel ore may encourage investment in processing facilities in the country, according to Deutsche Bank AG.
Some market participants say the ban starting in May would lead to a decline of 75 percent in nickel ore sales to China, Daniel Brebner, a London-based analyst at the bank, said in a report today. Instead, it will probably encourage exporters to invest in Indonesia, according to Deutsche Bank.
“We believe the May deadline could rather be a way for the Indonesian government to encourage ore exporters to make more concrete plants or commitments in investing in processing facilities within the country,” Brebner said. “Furthermore, the language in the regulation implies an exemption if an exporter can submit a plan to the government.”
Indonesian nickel ore accounts for 60 percent to 70 percent of the feed for China’s nickel pig iron production, he said. China’s production of nickel pig iron, an alternative to refined nickel, may fall in 2013 and 2014, according to the report.
Nickel-ore and bauxite shipments from Indonesia, the top supplier to China, may plunge 75 percent this year as a ban on metal-ore sales comes into force in May two years earlier than scheduled, according to the Indonesia Mining Association. The ban, originally set for 2014, was brought forward as exports surged in the past three years, Syahrir Abubakar, executive director, said in an interview last week.